1. A movement from one point on a production possibilities frontier to another r
ID: 1165839 • Letter: 1
Question
1. A movement from one point on a production possibilities frontier to another represents
A. full employment of labor but not capital.
B. an advance in technology.
C. a tradeoff.
D. unemployment.
E. a free lunch.
2. The idea of increasing opportunity cost is reflected in the
A. bowed out shape of the production possibilities frontier.
B. linear shape of the production possibilities frontier.
C. fact that the PPF shows there are unattainable production points.
D. bowed in shape of the production possibilities frontier.
E. positive slope of the production possibilities frontier.
3. When one? person's opportunity cost of producing a good is lower than another? person's opportunity cost of producing the same? good, it is called
A. specialization.
B. production possibilities.
C. a trade off.
D. an absolute advantage.
E. a comparative advantage.
Explanation / Answer
1. (c) A movement from one point on a production possibilities frontier to another represents atradeoff between two goods.
2. (a) The idea of increasing opportunity cost is reflected in the bowed out shape of the production possibility frontier. A flat/liner PPF depicts constant marginal opportunity cost while a bowed in shape depics decreasing marginal opportunity cost.
3. (e) When one? person's opportunity cost of producing a good is lower than another? person's opportunity cost of producing the same? good, it is called a comparative advantage. It forms the basis of specialization and hence trade between two persons.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.